Corporate governance model in Thai state-owned enterprises: structural equation modelling approach

Abstract

Purpose

Corporate governance (CG) is a mechanism for directing, administering and controlling organisations. CG has become a vital component in driving efficient operation of state-owned enterprises (SOEs). The purpose of this paper is to examine the relationship between CG practices and the performance of Thai SOEs.

Design/methodology/approach

This research is quantitative in nature; data were collected through a questionnaire, which was distributed to a sample of 1,140 respondents from 38 Thai SOEs. Structural equation modelling was used for data analysis.

Findings

The results indicate that the board of directors has a direct negative influence on the performance of Thai SOEs. However, management systems play a significant role in mediating the relationship between boards of directors and the performance of Thai SOEs. Additionally, corporate governance practices should be implemented not only at the board-of-director level but also at all levels of operation throughout the organisation.

Practical implications

To develop effective boards of directors, SOEs should be pushed to develop the appropriate strategic management systems (i.e. risk management, internal controls, internal audits, human resource management and information technology). These systems allow boards of directors to access and use important information that will help guide the business process, which leads to performance improvement in SOEs.

Originality/value

This empirical study investigates the relationships between CG practices and the performance of SOEs in the context of developing countries.

Citation

Khongmalai, O. and Distanont, A. (2017), "Corporate governance model in Thai state-owned enterprises: structural equation modelling approach", Corporate Governance, Vol. 17 No. 4, pp. 613-628. https://doi.org/10.1108/CG-01-2016-0021